Robertson announces more money for Budget

‘‘Our high levels of social capital are among our most valuable assets.’’

Grant Robertson

There will be more spending and lower debt levels in the 2021 Budget than expected, Finance Minister Grant Robertson says.

He told an audience of business leaders in Auckland that there would now be more money both for day-to-day spending and capital investment than he’d signalled in his Budget update in February.

But improving economic conditions mean this additional spending won’t be accompanied by increased debt levels; instead, he said the Government’s new debt track would show lower borrowing levels.

He said the better-thanexpected recovery allowed the Government to ‘‘keep a lid on debt and look towards a faster reduction in that debt once the recovery is secure’’.

Robertson didn’t put any numbers on these promises but as it stands, the Government has promised to spend $2.625 billion on new day-to-day initiatives this Budget, and $7.8b on capital investment over four years.

Treasury’s most recent forecasts show net core Crown debt – the Government’s preferred way of measuring debt – rising as a percentage of GDP (gross domestic product) to 52.6 per cent in 2023, before falling to 46.9 in 2025.

Robertson said this improved outlook was a result of the Government’s stewardship of the public finances during the pandemic.

On debt, he said there was ‘‘some more scope to keep a lid on debt and look towards a faster reduction in that debt once the recovery is secure’’.

He told the audience he ‘‘will not implement austerity measures in order to try to reduce our levels of debt before the recovery is secure’’.

‘‘In my view, the record of such policies is clear. We have seen internationally the toll that cuts to social services take on the most vulnerable in society, and how social capital can be eroded by a country attempting to cut its way to some particular numerical goal that is divorced from the economic realities of that country.

‘‘Our high levels of social capital are among our most valuable assets, and it is a large part of the reason why we were able to respond to Covid-19 as a country as well as we did,’’ Robertson said.

He cautioned that the optimistic economic data seen recently didn’t guarantee a rosier future – economists around the world are warning the pandemic recovery could be lumpy and variable.